Special Service and Features
India's GDP Growth Exceeds Expectations, Set to Surpass 7.2%: Chief Economic Advisor
KOCHI: 12th June 2023
"We have a good story to share about the Indian economy. The real GDP growth for the year ending March 2023 was 7.2%, surpassing expectations. The underlying momentum in the economy is quite strong. We expect the final number to be even higher than 7.2%,” stated, Dr. V Anantha Nageswaran, Chief Economic Advisor, Government of India, at the Industry Interaction organised by the Associated Chambers of Commerce and Industry of India .
He added that “While we have made significant strides, we must remain vigilant and continue our efforts towards growth and development. While progress has been made, there is still work to be done.”
Dr. Nageswaran stated, "For a country that is still a relatively low-middle-income country, there is never a time to sit on its laurels or think that there is a mission that's already accomplished. It is a journey, a work in progress, and it will remain so for a long time."
The Chief Economic Advisor also commended the prudent macroeconomic management during the pandemic, contrasting it with the challenges faced by some advanced nations. He stated, "The overall macroeconomic management in India has been prudent and sensible, avoiding overstretching ourselves during the pandemic. This has contributed to our stable growth and inflation management."
In his sectoral analysis, Dr. Nageswaran highlighted the positive performance of key sectors such as agriculture, industry, and services. He informed that the agricultural sector is well-positioned for growth, with strong food grain production, ample availability of seeds and fertilisers, and increased tractor sales. The industry sector, as indicated by rising purchasing managers' indices, construction activity, and steel and cement production, demonstrates confidence in expansion. Services exports have also performed well, contributing to India's growing share in the global GDP.
Regarding domestic demand, both urban and rural consumption indicators showed positive signs. Dr. Nageswaran pointed out the recent uptick in rural demand, attributing it to increased rural income, positive wage growth, and higher minimum support prices for farmers. He noted that urban consumption indicators, including passenger vehicle sales and new housing launches, indicate a positive trajectory for the overall economy.
On the external front, Dr. Nageswaran acknowledged the need for continued efforts to maintain and expand India's market share in merchandise exports. He highlighted “the importance of industry investment in research and development, marketing, and diversification of product range to sustain export growth.” He also highlighted India's comfortable foreign exchange reserves and the declining current account deficit, supported by strong remittances and a narrowing trade deficit.
Addressing concerns about inflation, Dr. Nageswaran reassured the public, saying, "Consumer price inflation is within the RBI target range of 2-6% and is expected to moderate to around 4% by the end of this financial year." He also stressed the decline in wholesale prices, which, while some may perceive as a potential slowdown factor, is driven by lower oil and food prices.
When it comes to startups in India, Dr. Nageswaran stated, "There are nearly 100,000 recognised startups in India, with over 43,000 led by women." Between 2018 and 2022, the compounded growth rate of jobs created by startups was around 32%. Over 60% of the 326 incubators are located in non-metropolitan areas, with 70% in cities and towns that are not even state capitals.”
Dr. Nageswaran also highlighted that the capital investment and digital technology to achieve the 6.5 percent growth.
Lastly, Dr. Nageswaran expressed confidence in India's economic trajectory, stating, "India's progress and contribution to the global economy have become increasingly consequential. We must continue to focus on what works for us, address remaining challenges, and deliver on our potential and promises."